US retail gasoline prices to be lower than prior forecasts

HOUSTON (ICIS)--Summer forecasts for retail gasoline in the US no longer put prices at record-breaking levels because of a plunge in futures on 5 May, analysts said on Monday.

“This is the peak right here [for retail gasoline prices],” said Michael Fitzpatrick, chief editor of the Kilduff Report, referring to the price jump at the height of concerns about the flooding of the Mississippi river.

Phil Flynn with the brokerage firm PFGBest said on 3 May, before the price drop, that “the odds were very high” that average prices would break all-time records by the US Memorial Day weekend at the end of the month.

The record of $4.114/gal was set in July 2008, according to the automobile group AAA.

On 9 May, retail prices were $3.960/gal, according to AAA.

Fitzpatrick said he does not expect a considerable upturn.

Flynn said that the price outlook has changed. Gasoline prices would remain down as long as there is no significant damage from the flooding of the Mississippi River. As of 16 May, no refineries were shut down.

The flooding did result in a rebound on the futures market on 9 May, creating a volatile market with gasoline prices changing by 10-20 cents/gal.

However, the underlying market fundamentals show the economy has marginally improved from 2008, he said.

“I don’t see a growing body of evidence that points to a stable economy,” Fitzpatrick said. “The European debt crisis is not going away.”

The government has “just put band-aids” on the economic troubles, he added.